[House Report 112-371]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-371

======================================================================



 
                     BLM LIVE INTERNET AUCTIONS ACT

                                _______
                                

January 18, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hastings of Washington, from the Committee on Natural Resources, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2752]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Natural Resources, to whom was referred the 
bill (H.R. 2752) to amend the Mineral Leasing Act to authorize 
the Secretary of the Interior to conduct onshore oil and gas 
lease sales through Internet-based live lease sales, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``BLM Live Internet Auctions Act''.

SEC. 2. INTERNET-BASED ONSHORE OIL AND GAS LEASE SALES.

  (a) Authorization.--Section 17(b)(1) of the Mineral Leasing Act (30 
U.S.C. 226(b)(1)) is amended--
          (1) in subparagraph (A), in the third sentence, by inserting 
        ``, except as provided in subparagraph (C)'' after ``by oral 
        bidding''; and
          (2) by adding at the end the following:
  ``(C) In order to diversify and expand the Nation's onshore leasing 
program to ensure the best return to the Federal taxpayer, reduce 
fraud, and secure the leasing process, the Secretary may conduct 
onshore lease sales through Internet-based bidding methods. Each 
individual Internet-based lease sale shall conclude within 7 days.''.
  (b) Report.--Not later than 90 days after the tenth Internet-based 
lease sale conducted under the amendment made by subsection (a), the 
Secretary of the Interior shall analyze the first 10 such lease sales 
and report to Congress the findings of the analysis. The report shall 
include--
          (1) estimates on increases or decreases in such lease sales, 
        compared to sales conducted by oral bidding, in--
                  (A) the number of bidders;
                  (B) the average amount of bid;
                  (C) the highest amount bid; and
                  (D) the lowest bid;
          (2) an estimate on the total cost or savings to the 
        Department of the Interior as a result of such sales, compared 
        to sales conducted by oral bidding; and
          (3) an evaluation of the demonstrated or expected 
        effectiveness of different structures for lease sales which may 
        provide an opportunity to better maximize bidder participation, 
        ensure the highest return to the Federal taxpayers, minimize 
        opportunities for fraud or collusion, and ensure the security 
        and integrity of the leasing process.

                          Purpose of the Bill

    The purpose of H.R. 2752, as ordered reported, is to amend 
the Mineral Leasing Act to authorize the Secretary of the 
Interior to conduct onshore oil and gas lease sales through 
Internet-based live lease sales.

                  Background and Need for Legislation

    The BLM Live Internet Auctions Act (H.R. 2752) amends the 
Mineral Leasing Act to authorize the Secretary of the Interior 
to conduct onshore oil and gas lease sales through Internet-
based live lease sales.
    Signed into law in 1920, the Minerals Leasing Act requires 
competitive bidding for federal onshore oil and gas leases. In 
1987, the Leasing Reform Act required this competitive bidding 
be conducted orally.
    In 2008, a 27-year-old global warming activist named Tim 
DeChristopher placed 14 fake bids worth $1.7 million on parcels 
of federal land that the Bureau of Land Management (BLM) was 
auctioning off for energy development. DeChristopher was 
convicted of civil disobedience, fined $10,000, and sentenced 
to two years in federal prison.
    In August 2009, the Department of the Interior issued a 
report listing Internet bidding as one option to reduce fraud 
in the bidding process. According to the report:

        The Internet leasing auction presents potential 
        benefits such as increased bidder participation and 
        accessibility; savings to bidders; electronic 
        verification of disqualified bidders; additional 
        identification and financial verification through pre-
        registration and pre-certification; the potential for 
        nationwide bidding instead of individual state 
        auctions; and the capture of lease auction data for 
        analysis, planning, and reporting.

    Additionally, in an attempt to prevent fraud in the bidding 
process and embrace advancing technology, Congress appropriated 
$250,000 in the Fiscal Year 2008 BLM budget for a pilot 
Internet leasing program. In 2009, BLM held a pilot auction 
with extremely positive results.
    Internet-based lease sales streamline the leasing process 
and reduce auction costs for the Department of the Interior. 
Current law stipulates that onshore lease auctions be done in 
person, while an Internet-based method would expand the bidder 
pool and allow more bidders access to lease auctions. H.R. 2752 
would reduce the potential for fraud in the bidding process, 
increase transparency, save taxpayer dollars, and ensure that 
the taxpayers get a fair return for activities on federal land.

                            Committee Action

    H.R. 2752 was introduced on August 1, 2011, by Congressman 
Bill Johnson (R-OH). The bill was referred to the Committee on 
Natural Resources, and within the Committee to the Subcommittee 
on Energy and Mineral Resources. On September 13, 2011, the 
Subcommittee held a hearing on the bill. On October 5, 2011, 
the Full Natural Resources Committee met to consider the bill. 
The Subcommittee on Energy and Mineral Resources was discharged 
by unanimous consent. Congressman Bill Johnson (R-OH) offered 
an amendment to the bill; the amendment was adopted by 
unanimous consent. The bill was then ordered favorably reported 
to the House of Representatives by unanimous consent.

                      Section-by-Section Analysis


Section 1. Short title

    This Act may be cited as the ``BLM Live Internet Auctions 
Act.''

Section 2. Internet-based onshore oil and gas lease sales

    This section gives the Secretary of the Interior the 
authority to conduct Internet-based auctions for onshore leases 
to ensure the best return to the Federal taxpayer, reduce 
fraud, and secure the leasing process. Each auction should be 
no longer than seven days. This section also requires a report 
to Congress not more than 90 days after the tenth Internet-
based lease sale.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(2)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
403 of the Congressional Budget Act of 1974, the Committee has 
received the following cost estimate for this bill from the 
Director of the Congressional Budget Office:

H.R. 2752--BLM Live Internet Auctions Act

    H.R. 2752 would allow the Bureau of Land Management (BLM) 
the option to conduct auctions for onshore oil and gas leases 
using Internet-based bidding methods. The bill also would 
require BLM to prepare a report comparing outcomes of Internet-
based auctions to outcomes of oral auctions conducted under 
current law.
    Using information provided by BLM and individuals familiar 
with Internet auction methods, CBO estimates that, assuming 
availability of appropriated funds, implementing the 
legislation would cost $2 million over the 2012-2016 period. 
That amount includes about $1 million to build an online system 
to facilitate auctions and annual costs to operate and maintain 
the system, which would be partially offset by savings 
associated with reducing the number of oral auctions conducted 
by BLM each year.
    H.R. 2752 could affect direct spending by increasing 
receipts from bonus bids; therefore, pay-as-you go procedures 
apply. Total bonus bids from onshore oil and gas leases 
averaged about $250 million annually over the 2007-2011 period. 
CBO expects that any change in receipts resulting from allowing 
the agency the option to conduct Internet auctions for onshore 
oil and gas leases would not be significant.
    H.R. 2752 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Jeff LaFave. The 
estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

    2. Section 308(a) of Congressional Budget Act. As required 
by clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives and section 308(a) of the Congressional Budget 
Act of 1974, this bill does not contain any new budget 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures. Using information provided by 
Bureau of Land Management and individuals familiar with 
Internet auction methods, CBO estimates that, assuming 
availability of appropriated funds, implementing the 
legislation would cost $2 million over the 2012-2016 period. 
That amount includes about $1 million to build an online system 
to facilitate auctions and annual costs to operate and maintain 
the system, which would be partially offset by savings 
associated with reducing the number of oral auctions conducted 
by BLM each year. H.R. 2752 could affect direct spending by 
increasing receipts from bonus bids; therefore, pay-as-you go 
procedures apply. Total bonus bids from onshore oil and gas 
leases averaged about $250 million annually over the 2007-2011 
period. CBO expects that any change in receipts resulting from 
allowing the agency the option to conduct Internet auctions for 
onshore oil and gas leases would not be significant.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill, as ordered reported, is to amend the 
Mineral Leasing Act to authorize the Secretary of the Interior 
to conduct onshore oil and gas lease sales through Internet-
based live lease sales.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

MINERAL LEASING ACT

           *       *       *       *       *       *       *


  Sec. 17. (a) * * *
  (b)(1)(A) All lands to be leased which are not subject to 
leasing under paragraphs (2) and (3) of this subsection shall 
be leased as provided in this paragraph to the highest 
responsible qualified bidder by competitive bidding under 
general regulations in units of not more than 2,560 acres, 
except in Alaska, where units shall be not more than 5,760 
acres. Such units shall be as nearly compact as possible. Lease 
sales shall be conducted by oral bidding, except as provided in 
subparagraph (C). Lease sales shall be held for each State 
where eligible lands are available at least quarterly and more 
frequently if the Secretary of the Interior determines such 
sales are necessary. A lease shall be conditioned upon the 
payment of a royalty at a rate of not less than 12.5 percent in 
amount or value of the production removed or sold from the 
lease. The Secretary shall accept the highest bid from a 
responsible qualified bidder which is equal to or greater than 
the national minimum acceptable bid, without evaluation of the 
value of the lands proposed for lease. Leases shall be issued 
within 60 days following payment by the successful bidder of 
the remainder of the bonus bid, if any, and the annual rental 
for the first lease year. All bids for less than the national 
minimum acceptable bid shall be rejected. Lands for which no 
bids are received or for which the highest bid is less than the 
national minimum acceptable bid shall be offered promptly 
within 30 days for leasing under subsection (c) of this section 
and shall remain available for leasing for a period of 2 years 
after the competitive lease sale.

           *       *       *       *       *       *       *

  (C) In order to diversify and expand the Nation's onshore 
leasing program to ensure the best return to the Federal 
taxpayer, reduce fraud, and secure the leasing process, the 
Secretary may conduct onshore lease sales through Internet-
based bidding methods. Each individual Internet-based lease 
sale shall conclude within 7 days.

           *       *       *       *       *       *       *


                                  
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